Retirement village contracts are notoriously complex and are governed by different legislation and regulations, depending on the structure. We have put together our top six factors you should consider when looking to reside in a retirement village.
1. Review the Fact Sheet & Disclosure Statement
Retirement Villages must provide a document known as a Fact Sheet and a Disclosure Statement. These documents set out critical details about the Retirement Village, including the entry fees, ongoing expenses and exit costs. These documents must be in the prescribed form, meaning that it is easier for you to compare and contrast several retirement villages in your area and make the right choice of village based on your needs.
2. Consider the Costs
Retirement Villages are notoriously expensive. Generally, the village will charge residents an ‘ingoing contribution’, which is an interest free loan that residents must pay before moving in. Villages may also charge an ongoing monthly cost for services throughout your stay. Lastly, the village will likely charge you an outgoing fee, which is generally calculated based on the length of your stay.
Residents should also be aware that retirement villages will often have provisions that require units to be reinstated to the position they were in when you first moved in. The costs can be upwards of several thousand dollars and will be deducted from the ingoing contribution you provided when you moved in.
Other villages may have provisions that require units to be refurbished, which means that the unit will need be renovated to modern standards when you move out. This is also generally a cost paid by the resident and can be upwards of $30,000 once the kitchen and floors are replaced.
Once you leave, the village will take it’s exit costs and reinstatement/refurbishment costs from the ingoing contribution you paid them on entry. You will be refunded what is left over after those amounts are deducted. The village will also ordinarily retain any interest accrued on the ingoing contribution, you will not have any right to that interest.
Accordingly, it is important and we strongly recommend that you obtain financial advice so that you are fully across all the costs and financial implications before signing the contract with the retirement village.
3. Review the Rules and Regulations
Retirement Villages will have a set of rules and regulations that govern the general operation and management of the village and cover important topics such as:
- Working in the residence and if it is or is not allowed;
- Visitor rules;
- Parking rules and parking permits; and
We recommend that you review these rules before signing any contract, to ensure that they suit your lifestyle and needs. If for instance you have a pet you would like to take with you, you should ensure that the village rules allow pets in your residence.
4. Consider the Termination Clauses
Each retirement village will have different provisions recorded in the contract, on when the contract ends (termination). Generally, this happens when a resident passes away or their care levels get to a stage where the retirement village is no longer in a position to look after their personal needs.
Considering the consequences of the contract ending and you losing the right to stay in your residence, it is critical that you understand how the termination clause operates and what your rights are.
5. Practical Considerations
It is also important that you consider the practical implications of moving into a retirement village. We recommend that you consider the following:
- Is the Village in a location suitable for your needs, near friends and family, shops and public transport?
- Is the level of care the Village offers, low, medium or high care and does this suit your needs now and, perhaps also in the future?
- Does it have a communal dining room?
- Does it have the amenities you require e.g. Tennis court, pool and other recreational infrastructure?
- What emergency, medical and security services are offered?
- Are any in-home support services available?
6. Professional Advice
We reproduce a quote from Residents of Retirement Villages Victoria:
“In our view, very few retirement village residents would be capable of understanding their rights under these provisions without expert assistance.”
We strongly recommend that before entering into a contract with a retirement village, it is reviewed by a lawyer with expertise in the retirement village sector, to ensure that you understand the legal ramifications of signing your agreement.
We further recommend that you engage an accountant or financial advisor to review and advise you on the contract’s financial implications.
Obtaining legal and accounting advice will ensure that you are in a position to make an informed choice of whether to move into a retirement village.